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How Asia Works: Success and Failure in the World's Most Dynamic Region

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How Asia Works( Success and Failure in the World's Most Dynamic Region) Hardcover JoeStudwell GrovePress

320 pages, Hardcover

First published March 1, 2013

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Joe Studwell

9 books88 followers

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Displaying 1 - 30 of 422 reviews
Profile Image for Matthew.
234 reviews64 followers
August 31, 2014
This was excellent, very well organized and concisely argued. Basic point I think is that nations need to take control of their own economic and industrial narratives. The first part was eye opening for me, focusing on agricultural policy and land reform - effectively arguing that the first stage of development should be redistribution to encourage high density labor intensive farming as a means to employ workers and increase acreage yields, which improves the current account and creates a domestic market. Though at a later stage he does say that as incomes rise, a move to large scale commercial farming is optimal for improving productivity, otherwise you get stuck ala Japan. Second part is on industrial policy which is more typically covered, key points here are I think needing to have infant industry policies, but subjecting them to export discipline and culling the losers. What's interesting here is the comp between Japan, Korea, Taiwan and to a lesser extent China. Third part is on marshalling finance, and I think this is a fascinating point -- that if industrial policy is in the right direction, financial policy is a secondary factor for devt (case in point Korea), and vice versa (case in point Malaysia/Thailand - relatively prudent financial policy, weak industrial policy; if you have weak everything you are just screwed ala Philippines). Last chapter is on China in light of the foregoing historical analysis.

It all strikes me as valid and making a lot of sense. There is generally a strong appreciation for historical and country specific context, and a solid bibliography for further reading. It is also generally an argument for more emphasis on the historical, rather than formal/mathematical, approach in development economics. What I hoped for more of were perhaps his thoughts on the funk that the East Asian model is now in - Japan in deflation, Korea struggling to empower its SMEs and disempower the chaebols, and Taiwan hollowed out by money going to China - and China facing the limits of its own export and investment growth model. In that sense his story is backward looking - useful as a framework for thinking about how SEA, perhaps, which is relatively behind the curve, could develop, but less useful for thinking about how North Asia will look in 10-20 years.
Profile Image for Bouke.
168 reviews30 followers
August 5, 2018
Really interesting book! This might be the only book I’ve ever read on macroeconomics, but it’s very well written and reads easily.

The book investigated and expounds the successful and not so successful economies of Eastern Asia, comparing why certain ones (Taiwan, S Korea, Japan) succeeded, while others (Philippines, Indonesia, Thailand) never reached the same level of success. The author explains that a lot of the policies that made these and other industrialized countries successful are contrary to those spouted by the world bank, IMF, and the US.
According to the author it comes down to three policies by the developing countries’ governments:

1. Agricultural development. When a country is underdeveloped and labor is cheap, it should redistribute farmland to small household farms, and make sure that this is done in a sound way such that the land can’t just be accumulated under one landlord again. The reason is that ‘gardening’-style farming as done on such farms, while labor-intensive is much more productive per hectare than large-scale mechanized farming. This will lead to a surplus in yields, which will lead to profits for the families, which they can then re-invest in their farms or use to improve their own living conditions. This policy should also be supported with subsidized fertilizer, education, etc. whatever support the government can give to improve the yield of small farmers. The problem in the Philippines is that, while they tried to do land reform, in the end the big families just regained their land through backdoor policies, and to this day are farming them like plantations, which are profitable but don’t provide the biggest amount of welfare for the nation.
2. Industrial policy. The country should nurture an infant manufacturing sector through protectionism and export discipline. The author points out that basically every industrialized country did so through protectionism, including Germany, USA, and the UK. The developing country should build up their own expertise, for example by doing technology transfers with foreign firms (while maintaining control) until they can innovate on their own. This should be stimulated by the government. An example from the book, is that during the Korean junta they rounded up all the business leaders and forced them to sign a statement that they agreed to listen to the junta, otherwise all of their possessions would be taken from them. They then coerced them into starting manufacturing businesses like cables etc. The other key factor is that the manufacturing businesses should be forced to compete on a global level through ‘export discipline’, which is policy that incentives businesses to export their products, for example by guaranteeing loans based on purchase orders from abroad (like Korea did).
3. Keep a tight leash on the financial system. The hire part is that the government should rightly control the finance system and ensure it works to their interests, instead of being captured by profiteers. An example was that in the Philippines, where the banks were privatized, the big family businesses all had their own banks which would loan money to the family business, which they would just not pay back, leading to the government picking up the cheque. In Malaysia they liberalized the financial system and IPOd companies prematurely, leading to huge stock market bubbles on unproductive companies. Only after industrialization should the banking sector be liberalized bit by bit.

The last chapter is on China, and talks about how all these things are also playing there, but on a much larger scale and with the twist that many of the large companies are state-owned.

In conclusion, very good and clear book. I learned a lot.
Profile Image for Hadrian.
438 reviews221 followers
November 1, 2020
Studwell's How Asia Works is a forceful challenge to a previous Washington Consensus of international development. His models for success are the German Historical School and the United States in the 19th century, and more recently South Korea, Japan, Taiwan, and China -- and by contrast, he sees more failure in Malaysia, the Philippines, Thailand, and Indonesia.

Studwell's model is easy to summarize. It is in three steps - First, agricultural reforms: land redistribution and labor-intensive farming, to maximize employment and build up a surplus for export - this works when the cost of labor is low. Second, manufacturing, built upon an active industrial policy and some tariff protection. The point of industrial policy would not be to pick winners, Studwell emphasizes, but to build up firms that can compete on the global markets and maximize gross, not net exports. Domestic firms would either adapt or innovate enough to compete with foreign competitors, or they would be cut off from funding. That leads to the third part of the program - finance. The banks would need to support infant industries but also need to instill discipline and develop firms and industries that can hold their own.

Intuitively this makes sense - while I don't know enough about the southeast Asian economies to really comment on how Studwell treats them, my only real caveat is the standard one given to most cases in developmental economics. Models are only models, and there are differences in legal and institutional backgrounds across countries. For example, Park Chung-Hee, an authoritarian, could and sometimes did, imprison executives that disagreed with him. While many rulers covet that power, not all of them have it. Not everybody starts off with a Korea, or a China, for that matter.

Going back on it, this book forms an interesting complement with the work of Yuen Yuen Ang - she asks the question of what reforms should come first - good markets, or good institutions? The answer is both, but allow people to improvise and incentivize them to do so. While the methodology of academic models is to focus on first causes and a clear split between different options, economies tend to defy predictions of them.

To conclude - Studwell has an interesting story to tell about the "developmental state", how developing countries can approach issues in different ways from developed ones, and he has the facts and citations to make his case. To read, and to take seriously.
Profile Image for Luciano.
175 reviews251 followers
April 21, 2021
This book should be mandatory reading in any development economics program. It makes a compelling case for the "northeast Asian" economic development model, which may look simple as "one, two, three", as the author puts it, but VERY hard to achieve. Which democratic country could sustain many years (even decades) of "pro development" policies, at the cost of making it really hard for an entire generation to have access to cheap imported goods? In any case, the recipe is there for any benevolent dictator to try it by him/herself. Economists may find a lot to criticize on Studwell's analysis, but, as he constantly reminds us, the succesful cases covered in the book more often than not simply ignored advice from multilateral organizations packed with econ PhDs and did their own way. Anyway, this is not an economics book; there are very few numbers and no mathematical expressions on it, just plain and well documented storytelling by someone who spent a long time getting to know those countries. At worst it will provoke, inform, and entertain; what else one should expect from a non-fiction book?
Profile Image for Dyan Canlas.
4 reviews
May 13, 2015
Highly stimulating. Very relevant with clear examples given and direct to the point. Influential read as I am part of an East Asian country, and seeing how we and neighboring countries operate is a bit disappointing and encouraging. There is room for improvement in the economies of South East nations, lots of it, but it will come from the people.

I barely knew economics concepts, but here I am trying to google the main points I take from the book. Very comprehensive and worthy read.
Profile Image for Duc Thinh.
28 reviews20 followers
January 23, 2016

How Asia works (HAW) tìm hiểu vì sao những nước châu Á lại có sự khác nhau rõ rệt về những thành tựu phát triển kinh tế trong 2 thập niên 80s và 90s. Studwell chú trọng vào 9 nước Đông Á thuộc 2 vùng: Đông Bắc Á và Đông Nam Á. Trung Quốc được mang ra phân tích riêng vì đây là một nền kinh tế theo tác giả là đặc biệt. Việt Nam được bỏ qua vì mục đích “đơn giản hóa” nội dung của quyển sách. Mình thì nghĩ có nhiều lý do khách quan hơn là lý do chủ quan này. Để phân tích sự khác biệt của những nước Đông Nam Á và Đông Bắc Á, Studwell chủ yếu đào sâu các diễn biến lịch sử, chính trị, kinh tế của các nước này sau chiến tranh thế giới thứ II, đến những năm thập niên 90.

Studwell chỉ ra 3 bước cần thiết đóng góp đáng kể cho phát triển kinh tế:
Cải cách ruộng đất để tái phân bố tài nguyên, việc làm. Bước này tạo động lực cho các cá thể để tối đa hóa sản lượng sản xuất. Theo đó, bản quốc được cung cấp đầy đủ lương thực để thúc đẩy tích lũy, tạo cơ hội xuất khẩu, chuẩn bị cho đầu tư dài hạn.
Các chính sách kinh tế nên được áp dụng thích hợp để thúc đẩy đầu tư trực tiếp và bảo hộ các ngành công nghiệp. Theo đó, hiệu quả và năng suất của các ngành công nghiệp sẽ được nâng cao, thúc đẩy xuất khẩu. Bản quốc sẽ thu được các lợi ích kinh tế, kỹ thuật và nhân lực. Chính sách tài trợ và kỷ luật xuất khẩu (export discipline) được phân tích rất kỹ trong bước này.
Thị trường tài chính và các nguồn vốn chủ yếu nên được quản lý chặt chẽ để phát huy lợi ích đồng bộ với mục đích kinh tế lâu dài của bản quốc. Ở các nước đã phát triển thì rất nhiều luật lệ dần dần được bãi bỏ (deregulation) trong thị trường tài chính. Nhưng Studwell đã chỉ ra rằng: ít nhất trong giai đoạn đầu ở các nước kém phát triển, thị trường tài chính phải được quản lý chặt chẽ bởi nhà nước (thông qua ngân hàng trung ương, hạn chế quyền sở hữu trong các công ty tài chính) để giảm thiểu những đầu tư sai lầm và chắc chắn những mục đích kinh tế dài hạn sẽ được thực hiện.

HAW phần lớn phân tích chi tiết về lịch sử và cải cách kinh tế, chính trị, bối cảnh xã hội hơn là nền kinh tế thuần túy của 9 nước Đông Á. Điều này cũng đúng thôi, vì sự phát triển kinh tế bị ảnh hưởng rất nhiều từ những nhân tố trên. Nhưng đối với những bạn chỉ muốn đọc và hiểu các lý do, nguyên lý cần thiết để thúc đẩy kinh tế ở các nước kém phát triển, thì có khoảng 30% quyển sách là không thật sự cần thiết. Những phần này Studwell kể lại các chuyến đi th��c nghiệm của ông qua các quốc gia Đông Á để hiểu thêm về văn hóa, lịch sử, và điều kiện kinh tế hiện tại ở các nước này. Nhưng nếu các bạn muốn đọc thật kỹ để hiểu từng đường tơ kẽ tóc của HAW và cũng muốn “du lịch” cùng Studwell thì HAW rất tuyệt vời.

M��nh đặc biệt thích phần ghi chú của tác giả ở cuối sách. Nó cung cấp đầy đủ thông tin cần thiết để hiểu thêm về những lập luận và nghiên cứu của Studwell. HAW là quyển sách hay cho những ai hứng thú về kinh tế nói chung và kinh tế đông Á nói riêng.

Đọc xong mình cũng thấy đúng khi Studwell không đưa Việt Nam ra phân tích.

Đoạn này trong phần Epilogue, mình khoái khoái :))

“Secondly, governments which have used one, two, three to develop in east Asia have frequently, and disingenuously, pretended that economic development is the only thing that defines the progress of a society. This stance is tied up with rhetoric about ‘Asian’ values, suggesting that ‘Asian’ (who are they?) people do want the same things as people in rich countries. This is rubbish. Economic development is only one part of a society’s development. The other parts, to do with freedom and the rights of the individual, are no less important. In China today, another government is claiming radical exceptionalism to justify deliberate institutional backwardness. China is putting off the creation of an independent legal system and more open, representative government until well after they are warranted. This is not what Chinese people want. It does not matter that you can afford a small car or a motorbike if your friend or relative disappears into one of the country’s extra-legal ‘black jails’. Nor does a new kitchen seem so pleasant if the food you eat in it is poisoned for lack of environmental controls or by the addition of some low-cost but toxic ingredient, the use of which has been covered up with official connivance. Emerging countries could themselves help to frame a more honest debate about economic development by setting and meeting benchmarks for the other components of overall development. In China’s case, its government’s unwillingness to actively discuss political and social progress scares rich, free countries so much that a sensible discussion of the requirements of economic development becomes all but impossible.”

This entire review has been hidden because of spoilers.
Profile Image for Kair Käsper.
153 reviews31 followers
March 6, 2019
I wanted to give this book 4 stars, because of the author's tendency to go into too much detail (for my liking). But I can't. This book broke a lot of what turned out to be misconceptions and it marvellously explains (in a Sapiens-kind-of-way) how countries like Japan, South Korea, China and Taiwan have become economic powerhouses while Philippines, Indonesia, Malaysia are trailing far behind, despite having roughly the same starting point. It's a well-researched and brilliantly argued blueprint for transforming a low-income country into a top performer, based on history and facts, not blackboard theories.

There were too many highlights to list them all, but here's a taste:
- turns out that I'm not so liberal as I thought. For a country to develop economically it needs to protect itself from outside exploitative forces. Trade barriers, state controlled banks, heavy (export) subsidies etc are not only beneficial, but necessary.
- wealth redistribution through land reform is extremely difficult to execute, but absolutely crucial to build up the country (reasons thoroughly explained in the book)
- export is everything, the winning formula is not to pick winners, but to kill the losers
- multinational corporations in low-income countries keep them low income as the arrangement benefits the countries leaders (and maybe even the country itself in the short term), but keeps local companies from learning and therefore competing in the long term
- China, South Korea, Japan have been good at limiting Western access and incentivising their star entrepreneurs to learn and incrementally increase exports. The results are easy to see when looking at car manufacturers and consumer electronics. Even so, most of the game takes place away from public eye, with lead roles played by investment, construction and industrial companies.

The only critique I have for the book is that it pretty much stops with industrialization and doesn't really tackle the already dominant tech scene. It almost feels like the last 1/3 of the book is missing. Still, this is probably the most fascinating book on economics I've read.
Profile Image for Ravi Srikant.
13 reviews2 followers
May 25, 2021
I wish Indian policymakers read this book before designing any of their policies. The book summarises the economic policies implemented by Japan, Korea and Taiwan that led to their stupendous growth and earned them the moniker "Asian Tigers". There is a comparison with Indonesia, Malaysia, Phillipines and Thailand as well on what not to do. The 3 key policies highlighted are land redistribution to support small scale independent agriculture, export oriented manufacturing policies with domestic protectionism and a controlled financial system that supports the first two. It was interesting to note that small scale owned agricultural plots had higher yields than large plots though the labour required may be higher. The Japanese economic reforms initially started by Meiji Japan in late 19th century and later carried forward post WW2 were heavily influenced from Prussian economic policies first put forward by Friedrich List in the 19th century when Prussia was developing. The final chapter on China just shows that China has till now successfully been able to implement the Japanese/Prussian model at a much larger scale.

Key points related to finance - All the countries had some sort of capital controls and had control over banking systems to be able to implement a national economic plan. When banks are given a free run they invariably lend to real estate and consumer sectors to chase returns which is what happened in Indonesia, Philippines, etc. Sadly, this is what has happened with almost all Indian private sector banks as well.
Profile Image for Oliver Kim.
170 reviews30 followers
January 25, 2019
The rise of the east Asian economies, and the lifting of their six hundred million out of grinding poverty, is the central fact of the past hundred years. In scope, nothing else comes close.

In “How Asia Works”, Joe Studwell tells us how this seeming miracle was made possible: a three-step prescription of land reform, export-focused industrial policy, and financial repression. Japan, South Korea, Taiwan, and (most recently) mainland China have grown rich by following this formula; by ignoring it, Malaysia, Thailand, Indonesia, and the Philippines have fallen behind. Earlier reviews, largely glowing, have already scrutinized the Studwell Plan’s three parts, so I won’t go into them here. But, as a grad student in an economics PhD program, I’d like to recommend this book on two further counts.

The first is stylistic. Studwell doesn’t equivocate. “No ruling elite in Asia”, he declares, “has come up with as many ways to avoid implementing genuine land reform as the Filipino one.” In Studwell’s idiom, offshore financial centers like Hong Kong and Singapore are “parasitic”; Malaysia, which halfheartedly tried to industrialize, is likened to a student “who went to school and college for twenty years but failed to pay sufficient attention”. Coming from academia, this kind of bluntness is refreshing—none of this “on the other hand, marginally significant coefficients are estimated in the third and fifth specifications” gobbledygook. Of course on many of these points Studwell is wrong. (He dismisses the success of Hong Kong and Singapore too easily, for one.) But being boldly wrong makes it easier to delineate where one disagrees.

The second point is more subtle. Most reviews note how, in his three-point plan of state-directed development, Studwell rebukes the neoclassical orthodoxy taught to almost every young macroeconomist. Special scorn is reserved for US-trained PhDs, among them the IMF and Indonesia’s “Berkeley Mafia”, whose advice to countries rich or poor, boom or bust, was to liberalize, liberalize, liberalize.

History has so thoroughly discredited this worldview that most serious experts will no longer defend it—debunking it is old ground. I found my thoughts stirred more by a second, methodological rebuke: namely, Studwell shows a deep concern for the sort of institutional details that economists are trained to leave out.

The standard neoclassical story taught in graduate macro (if taught at all) is that the east Asian economies grew out of poverty by rapidly accumulating capital, moving labor from farms to factories, and funding all of this through unusually high rates of saving. In its broadest strokes this resembles Studwell’s thesis. But for many economists, this will be the extent of their training in the subject. I distinctly remember a conversation in the graduate student lounge where, with the smug assurance of the newly converted, we discussed how neat it was that so much could be summarized with such a simple model.

Studwell dares us to dig deeper. For instance, what were the conditions in northeast Asia that freed millions of farmers to move to the factories? In neoclassical growth theory this reduces to an increase in L (labor) or H (human capital)—understanding the incentives of smallholder farmers, or the minutiae of how gardeners maximize yields per acre, was below the pay-grade of serious macroeconomists. But Studwell makes a strong case that the institutional detail of how land was parceled out (and who was doing the parceling) is what separates a country like Japan from the Philippines.

Or consider the case of manufacturing. With similar rates of investment, starting from roughly the same level of wealth, Korea has produced the Hyundai Elantra; Malaysia, the Proton Waja. The closed-economy, perfect-competition growth models featured in most textbooks have little to say on how this is possible. Studwell’s suggestion of export discipline reinforced by a government cudgel, while incomplete, is at least partway to a full answer. In both cases, historical experience cries out against against a reductive theory, shorn of political context.

Of course, (returning to the graduate student lounge) as young progressive types we economists-in-training will profess a belief in the importance of political institutions, the ubiquity of market failure, and the new mode of careful causal identification. But in our training we are given only the neoclassical growth model—most programs no longer even bother to teach economic history. Many of us will go on to positions in government or the commentariat, and will inevitably be asked how to “do a China or Japan”. I worry that, without a decent alternative, we will be tempted to fill in the gap with an easy generalization, like a writer resorting to a cliche.

In that vein, I cannot recommend this book enough to my friends pursuing economics PhDs. Graduate training, with its growth models and representative agents, provides a sturdy analytical framework for analyzing the problems of development. But, left bare, a framework is just a skeleton. What Studwell’s book reminds us, clearly and forcefully, is that our models are at best a rough approximation of a messy reality, and that there is institutional flesh to study between the equations.
Profile Image for Laurent Franckx.
185 reviews77 followers
September 16, 2018
I have read this book following the positive Twitter review by Noah Smith https://twitter.com/noahpinion/status...

I am now trying to find some points to add to what Noah Smith wrote on the subject but it's not easy to think of anything.

I should admit that while, reading the book, I often had the economists' reflex of asking myself: "well, right, this may be true in practice, but does it also in theory"? It's of course easy to make fun of this attitude, but it's actually a valid question: it's not enough to describe things that worked in a very specific context, you also need to understand whether the findings can be generalised.

For instance, I think that the theoretical arguments in favour of the "infant industry" argument has more credit amongst economists than most people realise. Anyone who can 'read' an economic model knows that the 'comparative advantage' argument in favour of free trade is based on a static analysis and that it can be optimal for a country to sacrifice short term gains of free trade to obtain larger gains in the future. The key objection against the "infant industry" argument is that, given how it has been applied in practice, it has mainly created rents for domestic industries that are protected against international competition, and that these favours tend to be perpetuated at the expense of domestic consumers.

The relevant question is thus: what works and what doesn't? And why do some policies work in some countries and not in others? It is more or less generally accepted now that "import substitution" is generally a very bad idea as a road to economic development. The contribution of Joe Studwell is that he argues in favour of a very specific type of "infant industry" policies, that combines large scale public support for export oriented industries with a consistent "culling" of any company who was not up to the job. But this leaves open the question why this type of policies was possible in Japan, South Korea and Taiwan, and not in Thailand, Malaysia, Indonesia or the Philippines. What made these countries 'different'? I still don't know. If the conclusion is that it's due uniquely to the characters of individual policy makers, then of course we cannot be very hopeful about any generalisable policy recommendations.

This being said, one of the things I really liked about the book is the complete absence of any doctrinaire thinking. Studwell argues forcefully in favour of land reform, but at least partly because it was necessary to stop spreading communism. He is opposed to premature deregulation of the financial sector, but admits that the IMF's insistence on the deregulation of the financial sector in South Korea during the 1997 may he have come in timely.

Studwell's book defies any ideological classification, and that makes it really great and challenging. You don't need to agree with everything to admit that we need more thinking like this.
42 reviews26 followers
December 12, 2021
It was an absolutely sensational book.

The book explains the general economic success of North-East Asian countries compared to South-East Asian countries. It lays out a very clear roadmap for other countries to follow to develop economically.

At times, it was extremely painful to read and I had to keep the book down and read something else. He would point out mistakes that the political class of the SE Asian countries made, and it was clear that similar mistakes are being made in India.

I learned a lot and it pointed me to a lot of further reading that I now know I would be interested in reading.
Profile Image for Ogsen Galstyan.
26 reviews6 followers
June 18, 2019
Հաճախ եմ լսում, որ պետության զարգա��ման հիմքում ընկած է կոռուպցիայի բացակայությունը։ Սա տեսակետներից մեկն է, որը երկար ժամանակ արմատացել է մանավանդ հայերիս մտքերում, որովհետև այն պարզ է, և հակադրելը դրան երբեմն զրույցը տանում է հուզականության և բարոյականության մասին դաշտ։

Իհարկե հասկանալի է, որ պետության զարգացում ասելիս, պետք է տարանջատել զարգացման 2 բաղադրիչ` I) տնտեսական և II) քաղաքացիական գիտակցության և մարդու իրավանքներրի տեսանկյունից զարգացում։ Չինաստանը օրինակ լինելով ամենամեծ տնտեսություններից մեկը, II) բաղադրիչով, մեղմ ասած, աչքի չի ընկնում։
Կարծում եմ կոռուպցիայի ցածր մակարդակը ոչ թե երկրի տնտեսական զարգացման նախադրյալ է, այլ ածանցյալ։

Joe Studwell-ը ֆանտաստիկ աշխատություն է գրել։ Այն հյուսիս-արևելյան և հարավ-արևելյան Ասիայի երկրների տնտեսության պատմության հրաշալի ուսումնասիրություն է։ Հիմնական եզրակացությունը գրքի հետևյալն է` հյուսիս արևելյան Ասիական երկրների (Կորեա, Ճապոնիա, Թայվան) զարգացման հիմքում ընկած է 3 բաղադրիչ։

Ա) Ցավոտ բայց հաջողված հողային ռեֆորմ և բարձր արդյունավետությամբ տնային տնտեսությունների (household farming) ստեղծում։ Այս բաղադրիչը հանգեցրեց ագրարային տնտեսության թռիչքաձև զարգացման, ինչը լինելու էր հիմքը զարգացման հաջորդ փուլ մտնելու համար։

Բ) Արտահանմանը ուղղված արտադրություն։ Պետությունը ամեն կերպ աջակցում և արտոնություններ էր տալիս այն ընկերություններին, որոնք ցույց էին տալիս արտահանման բարձր ցուցանիշներ։ Օրինակ Կորեայում, հիմնականում շինարարությամբ զբաղվող` Chung Ju-yung-ը, Գեներալ Պարկի իշխանության գալուց հետո, ստիպված էր հետևել պետության կարգադրություններին և սկսել զբաղվել այնպիսի գործունեությամբ, որին առհասարակ ծանոթ չի եղել։ Մասնավորապես` նավաշինություն և ավտոմոբիլային արտադրություն։ Այդպես ստեղծվեց` Hyundai մեքենան։

Գ) Չափազանց ուժեղ ձևով վերահսկվող ֆինանասական համակարգ, որի միակ նպատակը պետք է լինեին, Ա) և Բ) կետերում նշված ուղղություններին աջակցելը։

Այս քայլերը չեն եղել առանց կոռուպցիայի բարձր մակարդակի, բնականաբար, բայց այս քայլերը ուղղված են եղել լավ հասկանալով, թե ինչ է անհրաժեշտ տնտեսական զարգացման համար։

Իհարկե պետք է ավելացնել նաև տեխնոլոգիաների հոսքը ավելի մեծ տնտեսությամբ երկներից, բայց եթե այս 3 բաղադրիչներից, որևէ մեկը, հստակ մեխանիզմով չաշխատեր` տեխնոլոգիաների հոսքին զուգահեռ, չէր տեղի ունենա` աշխատուժի տեխնոլոգիական կրթության պրոցեսը։
Profile Image for Pete.
806 reviews52 followers
July 5, 2022
How Asia Works : Success and Failure in the World’s Most Dynamic Region (2013) by Joe Studwell is a great book on Asian Industrial development. Studwell was a business journalist who now has a PhD.

The book is recommended by a vast array of economists and businessmen. After reading Noah Smith recommend the book again I finally got around to reading it.

The book looks at the incredibly important question of why some large non-Western countries have managed to develop quickly and catch up to the richest countries in the world. So far, these countries are limited to Japan, Taiwan and Korea with China rapidly growing.

Studwell writes that three things were done by Japan, Taiwan, Korea and China successfully that were not done by Malaysia, Thailand, Indonesia and the Phillipines. They are 1) Land reform so small farmers can intensively farm. 2) Work on industrial policy for manufacturing and to increase technological sophistication with export discipline and 3) Direct financial institutions to support these endeavours.

Most importantly these are not the recommendations of textbook economics. Studwell also acknowledges substantial corruption occurring with this development but with the states having an over arching push toward exports and industrialisation.

Studwell excludes the very rich city states of Hong Kong and Singapore. This is a bit of a sneak. Hong Kong has 7.5 million residents and Singapore 5.4M. That is they more or about as many people than Denmark, which is a country often regarded by many as a model society.

At any rate, Studwell’s theory of growth definitely has successful examples. He also points out that Germany, the US and others followed similar strategies to catch up to Britain.

The book also points out that once a country has become rich and technologically sophisticated it should change and work on efficiency more. Studwell describes how Japan has failed to do this and this explains the lack of growth in Japan since the early 1990s.

The book is now nine years old and it has remained very relevant. The situation has changed somewhat for Indonesia and Malaysia that are now growing well but are still much poorer than Japan, Taiwan or The Phillipines.

How Asia Works is an excellent book that is definitely worth reading for anyone interested in the question of how developing countries can get rich.
Profile Image for Nathan.
20 reviews95 followers
November 11, 2022
An excellent economic study of Asia – a lot can be learned. Often, economic thought diverges in Asia compared to the West, and even from the IMF imperative of complete free market. There is more emphasis on state financing, which is a double edged sword depending on whether the capital is used effectively or not. Capital used to fund development of infrastructure, manufacturing, and land reform (to crack down on despotic land ownership) is ideal. These factors help ensure a nation's human capital is widely deployed, wherein it leads to frenetic output: such as in a country the size of China. Overarching this environment is a cohesive public and private sector; which is interlinked by shared emphasis on achieving a nation's developmental goals. Lastly, banks should be encouraged not just to lend high margin domestic loans, but also to industrial firms that meet one condition: export discipline. Firms that can compete globally with efficient margins can further grow when given capital for vertical scaling: this has worked well for industry heavyweights such as POSCO Steel, Industrial and Commercial Bank of China (ICBC), Cosco Shipping, and Asian Infrastructure Development Bank, which in their infancy were State firms.
Profile Image for Denis Vasilev.
631 reviews92 followers
January 23, 2020
Исследования успехов и провалов азиатских экономик, с выводами по рецептам достижения успеха. Весьма интересный противовес концпеции «плоского мира». Критика либеральных рецептов для развивающихся стран. В общем IT пока неспособно заменить промку в деле поднятия благосостояния целого государства. Рекомендую, написано просто и понятно
Profile Image for Elena Zhukova.
53 reviews4 followers
July 29, 2019
A must-read for anyone interested in Asia or in a more general question of economic development. The author is a bit repetitive with the core principles he has identified, but now I'm sure I'll remember them
Profile Image for Graeme Newell.
201 reviews50 followers
December 20, 2021
This was a delightfully smart book. The author lays out the proven economic development steps that turn fledgling economies into international powers. He goes through each major Asian country and tells the story of how they went through agricultural reform, to industrialization to trading powers.

Too many of them neglected the necessary steps and ended up falling by the wayside. Their lack of astute planning decades ago is powerfully evident in their struggling economies today.

There is truly some original thinking in this book and I left very impressed with his basic premise. He so clearly differentiated the necessary steps that lead to success.

I gave the book 4 stars instead of 5 because of its flat writing style. This is a professorial tomb that is incredibly DRYYYYYYYY. Despite this, I still leave mightily impressed with this book. I really learned a lot about the necessary steps that all nations must use to ascend to economic viability.
Profile Image for Ajit Mathew.
59 reviews21 followers
May 1, 2022
The book is about how successful economic in Asia developed. In a nut shell, an underdeveloped country should first focus on agriculture yeild and land reforms so that it's population becomes productive and can sustain itself. Then the country should focus on manufacturing which will provide employment to masses and also work as foundation for technological improvement. And in the final stage the country should develop financial markets which will facilitate import/export, easy access to credit and lubricate flow of money through economy. The author provides examples and counter examples to prove his point. The writing style is very academic which made it a very difficult read. Not recommended if you are a casual arm chair economist like myself.
Profile Image for Adrian.
126 reviews13 followers
August 14, 2022
So a few ideas out of this book:

1. When a country is in the initial phases of development it must focus on gardening agriculture. That means land has to be redistributed equally so that all people have a right to compete. Garden agriculture is by a factor of 3 to 6 more efficient than industrialized agriculture output wise. It is not efficient in human hours , but guess what , when you have a poor country manpower is all you have in excess so gonverment must make use of it.
Gonverment must start incentivizing people with fertilizers and freebies so that people produce more , food grts cheaper and somewhere along the way you start exporting.

2. Once you have a powerful agriculture then you start building industry. Gonverment must invest in the learning phase of manufacturing , must steal know how. It must be very careful not to join joint ventures with other international brands without stealing their know how. The key thing here is to learn as much as possible and to start having an EXPORT DISCIPLINE. This is the theme of this book.
There is no other way a gonverment can know how good a company is then by checking its exports , my seeing how that company behaves in the world market and by setting export expectations for future freebies , if its conpetitive enough. It is a critical part since the entrrepreneur will always go on the easy path of real estate without creating value in the country. it is the duty of the state to incentivize and keep a tight leash on its high performing entrepreneurs. Gov must also start weeding losers and incentivizing winners.Along the years this turns to consolidation of great big firms that have huge leverage of said gonverment , but tat that point the country is already past development stage and does not make the discussion of this book.

3 Financial mechanisms: gov must hold banks so that it can continue funding industry while it is still developing. It knows the learning phase costs and the companies which are helped wont produce dividents for many years injtiailly but it is imperative to continue financing them. If state liberalizes banks , and invites private held funds and stock market , these will run away at first sign of trouble when financing a company in development , or will stop funding due to low yield.

These 3 points are more or less what this book is all about and it describes how countries from North East Asia (South Korea , Taiwan , China and Japan) have implemented these ideas by the book while countries of South East Asia. (Thailand, Malaysia. indonesia , Philippines) have fucked up one way or other despite starting alot better after WW2 both economically and politically wise.

A must read , an eye opening experience.

Now comparing this to my own country Romania to Ceausescu era, it looks like he didnt fuck up because he took loans and built stuff like industry and mangufacturing plants. He fucked up because he didnt focus on EXPORT DISCIPLINE, he didnt try to make the products he was developing better , he didnt focus on perfectioning them and making them sellable on the world market. He produced the same shit all over again along the years.
Profile Image for Sashko Valyus.
199 reviews9 followers
December 28, 2018
Хороша книга з, мабуть, завеликою кількість подробить і сносок як на такий жанр. Назва не зовсім правильно передає суть книги, бо Азії насправді не вдалося, а книга про те, як Азія працює. Хороший аналіз розвитку економіки країн від Індонезії до Південної Кореї дає хороший аналіз кроків які були зроблені, або ні, заради зрозсту економіки.
Весь час не міг позбавитися думки, що шлях Філіпін дуже схожий на шлях України, а Філіпіни не є країної із сильною економікою.
Ще плюс проблемою є те що книга товстезна, але це як так зрозумів економлять на хорошому папері
Profile Image for Omar.
14 reviews
June 25, 2018
the least libertarian book

it's an _actual plan_ to go, uh, "from third world to first", and it makes sense, and it seems to work! it's politically hard, but it's not magic!

pretty much summarizes to: land reform & export discipline

this review elegantly reframes the book's policies: they are all about _directing toward positive externalities_ for development:
- land reform => higher productivity, larger tax & consumer base
- export discipline => making better and more advanced products, development of local technical know-how & ability to capture profits high in value chain

I _really_ like the land reform stuff, had not thought about it before.
going to look at all third-world countries through land distribution lens now
(also interesting upside since it implies we could make huge gains in industrial agriculture yield by figuring out technology that can substitute for intensive gardening labor)

I like the brief criticism of the "education" cargo cult
I like the "entrepreneurs just gonna entrepreneur, they're not good or bad, apply forces to make them serve your interests" stuff

curious about outside factors which may be required for model to work: US support, anti-communism, ethnic homogeneity, state formation?

🤔 at exclusion of Singapore & Hong Kong, even given author's reasoning.

applicability of model to 18th/19th century US/UK/Germany is unclear
usefulness of these policies once you're on the 'technological frontier' (eg you and me) is unclear: author seems to go back and forth on these
Profile Image for Ben Khoo.
12 reviews54 followers
July 20, 2017
Recipe for development success:

1. Land reform - Split land evenly. Don't let the cronies take control!
2. Manufacturing - Focus on exports, and being competitive overseas. Don't let the cronies take control!
3. Finance - A tool to accelerate industrialization, never a end in itself. Don't let the cronies take control!

Mix thoroughly. Let sit for 25 years.

While the title is how "Asia" works (actually it should be "How Asia Worked"), the book is really about Studwell's recipe of development, applied in the context of East and South-East Asia. His repetition of "export-led" may be droning at times, but it does drive the point home that developing a manufacturing-driven economy is the crux of success, and it makes one wonder if this recipe can be replicated in different regions in the world.

Inevitably, the key to success is a strong leader that puts the right industrial structures and incentives in place, keeping an eye on increasing productivity of the nation. Of course, since the growth to capital and labor can take you so far, productivity is the secret sauce.

Overall, an great read, especially the personal anecdotes from the author!

P.S. Don't let the cronies take control.
Author 3 books4 followers
April 25, 2021
Not easy but worth it

This is an academic look at the economic successes and failures in Asia. Considering the complexity of the topic this is a very concise yet informative book. I wouldn’t necessarily recommend it to someone who has a very basic understanding of economics but rather for individuals who have at least a foundation in Macro/ history and are interested in diving a little deeper into a complex world.
Profile Image for Aaron Arnold.
428 reviews132 followers
November 29, 2018
The title makes a bold claim, but overall Studwell does an excellent job of condensing, comparing, and commenting on the development paths of almost all of the major northeast and southeast Asian economies from an elevated yet rigorous level. While space prevents him from discussing some of the most unique countries - I'm thinking mostly of North Korea and Vietnam as well as Singapore and Hong Kong, though surely Laos, Cambodia, Myanmar, and Papua New Guinea have their own interesting stories - the room freed up thereby lets him pack in a remarkable amount of high-level analysis in about the remaining countries: Japan, South Korea, and Taiwan; Thailand, Malaysia, Indonesia, and the Philippines; and of course China, which appropriately gets the entire fourth section of the book all to itself. The remainder of the book is split amongst the other seven nations (or six plus whatever you want to call Taiwan), divided into three different stages of development: agriculture, manufacturing, and finance.

Successful development strategies begin with agriculture, the sector that has contained the majority of the workforce in every undeveloped country in history. Farming's relationship to political structure is complex, but most underdeveloped societies seem to be stuck a sort of feudal pattern, with a few large landowners controlling vastly disproportionate shares of each country's land and hence political system (note that this harmful pattern may have been encouraged in former first-world colonies). Since the most efficient way to get food is to have many small farmers working many small plots of land (it will come as no surprise to sustainable-food advocates that this "garden-style" method is typically more effective than US-style agribusiness), the first task of every forward-thinking leader is to break up large estates and redistribute the land to the people. Some countries like Japan managed this well, raising their food production as well as increasing economic mobility, while oligarchies in others like the Philippines made sure that redistribution never disrupted their control of local markets. While land redistribution and the instigation of widespread household farming does not by itself guarantee success, failure to bring the masses into the formal economy means both that fewer people make the jump from "starving miserably" to "just getting by" and that power remains concentrated among very few hands.

Once land redistribution has succeeded, industrialization can proceed. In Europe, the Industrial Revolution began first with the textile industry, which is a path many countries still take (e.g. Malaysia's garment industry). Light industry is well-suited for developing countries, since there will frequently be many small factories requiring large amounts of not-especially-skilled labor. Additionally, the increased number of household farmers looking to sell crops will need things like pickup trucks, motorcycles, or motorized bicycles, spurring the growth of companies like Honda who got their start by building just such vehicles. There's a persistent debate among economists: should developing countries raise tariffs and provide subsidies to infant industries, risking corruption and inefficiencies; or should they pursue neoclassical free trade policies, following the theoretically maximally efficient orthodox neoclassical model at the risk of having infant industries crushed by superior foreign competition? Studwell convincingly demonstrates that the former is the correct path, citing the arguments of Friedrich List and Alexander Hamilton among others. The common metaphor is that tariffs and subsidies are like a ladder used to climb up, to be kicked away when done, but the examples of rich countries that used mercantilist policies to get rich and then later mostly or partially deregulated (i.e., all of them) shows that early state support for industry is vital. South Korea's support for Hyundai, Daewoo, and others had many positive spillover effects for related heavy industries like shipbuilding.

However, it's important not to gloss over the failures of heavy state involvement in industry. Even in the US, development projects like railroad construction after the Civil War were notoriously corrupt, and all of the same risks of cronyism, rent-seeking, and regulatory capture are present in Asia. The most important thing for countries to do, as shown by the examples of Japan and South Korea, are to focus on exporting manufactured goods which can be traded as opposed to cultivating service industries which can't, and then promote export discipline by not allowing domestic firms to get lazy. Japanese cars were laughed at when they first hit American markets, but they quickly improved and seriously challenged the Big Three because Japan would not allow their manufacturers to rest on their laurels; Malaysia was not nearly so stringent with its auto industry, and as a consequence Proton never achieved the same reputation for quality. A common pitfall for countries is to simply ask foreign companies to set up shop with some branch plants in their country and raise their living standards that way. Trying to skip ahead in that method doesn't work for a few reasons: first, incentives or subsidies to the foreign companies are often expensive, representing an export of capital desperately needed at home; second, much less knowledge is transmitted to the local economy than if native entrepreneurs had been given the support to figure things out for themselves and create their own supply chains; third, fewer jobs are created, with those that do being generally of lower quality; fourth, interactions with the foreign companies are rife with potential for corruption.

This has implications for the third stage of development, the creation of a domestic finance industry. Studwell goes into a great amount of detail on how various countries' financial sectors either contributed to their paths of development or inhibited them, and the Asian financial crisis of course figures prominently as a warning sign to countries that were on the wrong development path. Another reason to prefer investment in manufacturing over services is that once an independent financial sector gets going, money tends to flow to lucrative but non-productive sectors like high-end real estate speculation rather than, say, new industrial infrastructure. This is especially true in the case of countries whose elites survived the process of land redistribution and the creation of a manufacturing sector, and who now maintain critical positions in agriculture, industry, and finance (thus leading to sweetheart loans, kickbacks, and all manner of related corruption). Financial crises are devastating no matter how developed your country is, but one with plenty of domestic firms is able to get back on its feet much more quickly than one with a bunch of empty factories that used to be owned by foreign companies. Countries that develop successfully engage in heavy financial repression and capital controls, which increases the savings rate and allows for the currency exchange rate to be used to favor domestic producers. This has the cost of artificially stunting consumption, as well as perennial demands from the IMF for financial deregulation and floating exchange rates, but as long as a country's leadership is not too dominated by a few families, as it was in places like the Philippines, it should be able to use the tools of modern international finance to finally compete on a level playing field with rich Western countries.

All this brings us to China, whose development path has similarities with both the richer Northeastern Asian countries and the poorer Southeastern ones, and is hence unique enough to deserve the sole focus of the final section even aside from its singularly vast scale. It's come a long way from disasters like the Great Leap Forward; China's modern rush towards development is an acknowledgment of the failures of state-lead growth, and yet even today China has immense state companies that play vital roles in its economy, alongside the countless numbers of foreign-owned companies that use its cheap labor to assemble much of the world's high technology. There's a business concept (first introduced by the CEO of Taiwan-based Acer, interestingly) called the "smile curve" - profits are highest in the early product design/R&D stage, low in the manufacturing stage, and high again in the sales stage. China's leadership is very aware of what needs to be done to get domestic businesses to climb higher and higher up the value chain and cease relying so much on its current comparative advantage in cheap labor, but frequently that's easier said than done. Studwell remarks that often Chinese businesses find it easier to compete in the business-to-business heavy-industry sectors like energy, shipbuilding, or rail compared to more consumer-focused sectors like high tech, but since China is for the most part adhering to the successful path of heavy financial repression and capital controls (though anyone who's followed the Bo Xilai story knows the vast scale of Chinese corruption), it seems that China will most likely emerge in a few decades at or near the technological frontier of the rich Western countries.

Any book that tackles such a broad subject invites criticism, but for the most part the book seems to mesh well with other books I've read. James Fallows' China Airborne had a lot to say about the development of the Chinese aviation market, which bears directly on many points raised here about the manufacturing sector and its role as a driver of acceptance of international business standards. The sections on the Asian financial crisis also seem to mesh with what I've read from other sources like Paul Krugman's The Return of Depression Economics (an earlier work of his, "The Myth of Asia's Miracle", also offers an interesting alternative perspective on Asian development). Furthermore, even though his histories of each individual country can't help but oversimplify, his general insights on pitfalls of development seem to cover the specific agonies of each individual country that for one reason or another has gotten into trouble. Overall, Studwell has done an excellent job of explaining why leaders like Park Chung-Hee, Deng Xioaping, and Meiji took their countries in such different paths than Mao Zedong, Mahathir Mohamad, and Sukarno in a brisk, well-argued volume.
Profile Image for Mbogo J.
397 reviews27 followers
March 3, 2021
I read a tweet sometime back that "development experts" peddle their wares in Africa while real development occurs in Asia. You will never hear any of the Asian tigers in need of Sachs or any of those hot air peddlers. That tweet being nothing but truth itself, its understandable why I read this; to see how real development comes about. The short answer? Its rough. Forget your pet economic theory, real development comes about through land repossessions, Korea at some point caned and jailed wayward entrepreneurs, capital controls, basically the opposite of what you've ever heard from someone who talks about some invisible hands.

Off course this book did this with more tact than what my opening paragraph has put out there, but its strength lies in the fact that Joe Studwell told it like it is. Long ago I came to discover research reports from the "big" institutions were mostly propaganda, trying to shape reality through publications rather than fidelity to the truth. It's all about agenda and your view point...

This review should not turn into a diatribe. This is a good book. I feel it should be read in tandem with Ha-Joon Chang's Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism if you haven't read it already and see how the economy really operates.
Profile Image for Clémentine.
100 reviews16 followers
April 8, 2021
Well structured book with 3 major parts resuming the decisions which contributed to the development of Asia economic : 

-Land reform to produce high yield household farming
-Manufacturing focus oriented in export discipline 
-Financial repression and manipulation to these ends 

Overall, in a post Second World War context, North-East-Asian Governments did a pretty good job with effective land reform Programs. Banks were kept under close control. International inflows or outflows of capital were limited so domestic capital stays under state control and development couldn’t be disrupted. They set the need for industry to defer profit until adequate learning process. Then, they deregulated with precaution.

Unfortunately for South-East-Asia, land policy dysfunction, premature deregulation and absence of export discipline leaded to failure in development.
6 reviews
May 17, 2020
Joe Studwell looked back to history and figured out the economic framework for developing a national economy in the most simplistic and fundamental way. I've learned so much about different economies in Asia in the past and could see the results from those previous decisions/ strategies each made lead to the current presence of each country in Asia. This book has heightened my interests in economics for its simplism and logics, I learned to understand the importance of this decision making to our lives and others. It helped me realise what I wanted to learn in college and thus I pursue a Bachelor in Economics in my undergrad.
Profile Image for Alex O'Connor.
Author 1 book60 followers
January 29, 2019
A very informative and readable account of how Asia got to be where it is today through the lens of agriculture, manufacturing, and finance with particular emphasis on China. I learned a great deal from this book and recommend it highly.
8 reviews1 follower
April 9, 2023
4.5 stars, in fact.

Terrible title, excellent book.
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